Report Indicates Improvement In The Business-for-sale Market

December 13, 2012

Report indicates improvement in the business-for-sale market

More small businesses were bought and sold in the summer of 2012 than the year before, according to a recent report. A study by BizBuySell.com, an online marketplace for buying and selling businesses, found that brokers closed 1,189 transactions between July and September 2012, an increase of nearly 3 percent from the same period in 2011.

The report is encouraging news to many small-business owners who have hopes of selling the companies they have worked hard to build. The business-for-sale marketplace has struggled in recent years, bottoming out in 2009 as the Great Recession took hold of the nation's economy, and making only modest improvements in the years since.

Mike Handelsman, Group General Manager of BuyBizSell.com, says that the uptick in business sales activity in recent months may be linked to growing motivation among sellers to transfer ownership of their companies before 2013, when many expect to see an increase in the capital gains tax, Business News Daily reported. Overall small business health is also improving, the study found, and sales prices are on the rise as well. While many sellers have had to settle for lower sales prices in recent years, their situation is showing signs of improvement as cash flow levels slowly normalize.

Considerations when selling a small business

As elsewhere in life, timing is critical when it comes to selling a small business. And because the process of selling a business can take months or even years, it is important for business owners to plan well in advance in order to avoid missing the window of opportunity.

In order to help the process flow more smoothly if and when the time comes to sell, business owners should make a habit of keeping their records up to date. This includes keeping a detailed business history on hand, as well as tax returns and financial statements from the last several years. Along with other documents, this information will help facilitate the valuation of the company -- an important first step in the sale of a business.

In addition to timing and preparation, another factor that can make or break the sale of a business is finding the right buyer. In many cases, locating a suitable buyer may require a great deal of advertising and promotion over the course of several months. Even after a prospective buyer has been lined up, business owners should continue to be in contact with other interested parties in case the initial deal falls through.

The sale of a small business involves a wide range of complex legal and contractual issues, and a vast array of potential pitfalls. To avoid costly mistakes and reduce the likelihood of future litigation, business owners are encouraged to work closely with an experienced business attorney who can help them plan and execute the sale in the manner that best protects their interests.

Article provided by Barker, Leon & Fancher, LLP
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